What happens if you are unable to repay the home loan that you took within the stipulated time? For one, you can expect the bank to send a notice with the required amount to be paid. The failure of making the full payment may force the bank to seize the house.
If the borrower cannot repay the mortgaged payment, the bank sends a Notice of Default. If the borrower does not respond by the specified date, the bank takes legal action to recover the loan amount due.
According to the laws created to safeguard lenders, a bank or any lending organisation can seize the property of the person who is unable to repay the loan on that property. The bank does not need to go to a court to claim the property because they are lawfully allowed to do so themselves.
The rights of the borrower
A person availing a loan is also entitled to some rights. The Consumer Credit Protection Act allows the borrower to take action against unfair loan repayment calls or excessive and repetitive pressures. The loan providers can call you only at a specified time and you have the full right to modify a loan under specific conditions.
Auction of the property
Once the property is seized by the bank, they arrange to auction it. First, they find out the real market value of the property. Next, they determine a value for the minimum auction price, which is 15-20% lower than the market price. The price rises with the bid offers from the buyers.
Points for a buyer to consider before auctioning
If you want to buy a property in auction, keep an eye on the newspapers for details such as the date of the auction, price and location of the auction.
Sometimes, a lender arranges an online auction for a property. This allows them to reach a large number of buyers.
The legal aspects
Hire a lawyer to get acquainted with all the legal terms and conditions. You will also be charged a fee to inspect the property.
Contact the municipal corporation and enquire about the legal aspects and tax issues related to the property. Check if it is indeed safe for you to buy that property.